Even New York will become a tax haven

Posted by Marc Hodak on July 6, 2007 under Patterns without intention | Comments are off for this article

New York, the bluest city in the among the bluest states, whose people love taxes, is phasing out taxes on apparel and footwear by next year.

Interestingly, just a couple months ago the NY Times had an article about how popular destinations like New York were socking it to their tourists in the form of out-of-control hotel and rental car charges, telling visitors in essence to, “suck it up, you don’t vote here.” But even New York got embarrassed by their 20 percent tax rate on hotel rooms when the joke among travel agents became, “stay for four days, pay for five.” New York has since backed down to about a 14 percent rate, at the lower end of the range among major cities. Tax competition.

Now, politicians seem to be singing a very different tune:

The repeal of this tax will enhance the City’s attractiveness as a tourist destination, particularly to individuals from outside the United States who wish to take advantage of the current exchange rates. Eliminating the city’s portion of the sales tax will encourage consumer spending, which will help to stimulate economic activity and create and preserve jobs in New York.

Tax competition.

Where will it end? I predict, in the distant future, a uniform rate on consumption and earnings–all in–somewhere between 10 and 15 percent. That’s the rate that would justify a political entity’s ability to secure the rights of those transacting and owning property within its territory, and ancillary services most efficiently produced by a polity rather than a market. Everything else will be competed away–the graft, the logrolling, the favors to special interests that come at everyone else’s expense, the looting of those who can afford to pay. Tax competition. The very people who hate it will be disciplined by it, as surely as water runs downhill.